Foreign Card Use Brings US Dollars Back to Venezuela

Foreign credit card transactions are reportedly bringing more foreign currency into inflation-plagued Venezuela.

That’s according to a report Thursday (June 13) by Reuters, citing four public sector and finance sources who said these transactions have been growing steadily since the government loosened currency controls five years ago, allowing for more use of U.S. dollars.

As the report notes, Venezuelans who have bank accounts abroad use foreign cards, their bank outside Venezuela sends the funds to its local intermediary bank in dollars.

That local bank can then sell the dollars, bolstering its limited supply of foreign currency and helping the government to keep the exchange rate at 36.4 bolivars to the dollar and curb inflation, which came to 59.2% in the 12 months leading to May.

The government of President Nicolas Maduro is seeking to raise its tax take so it will have funds to direct toward public workers, said sources who asked not to be named, as it hopes to garner their support in Venezuela’s upcoming elections.

“This foreign currency helps support the exchange market,” a public sector source who asked not to be named told Reuters.

Roughly 11% of transactions at supermarkets, pharmacies and other businesses are made using international cards, up from 8% in 2023, the report added, citing information from local analyst Ecoanalitica. And about $60 million from transactions on foreign credit and debit cards is sold by local banks each month, according to finance industry estimates.

Earlier this year, Venezuelan opposition politician, Leopoldo Lopez, and a national security leader at New York-based blockchain data firm Chainalysis, Kristofer Doucette, released a report saying that democratic governments should set up structures to combat money laundering.

They also claimed that Maduro has attempted to use crypto for “moving illicit proceeds into the international financial system.”

Meanwhile, inflation continues to pressure Americans, though obviously not at the level it is affecting people in Venezuela.

While the headline number on inflation showed a slight cooling of the pace of rising prices, at least as far as May is concerned, new government data shows that two key areas of spending — rent and food consumed “away from home” (that is, at restaurants) — were still higher during last month.